Washington State breaks $2bn on 2011 commitments

The $78bn retirement system allocated around $550m to two private equity funds, including forming a new relationship with emerging markets giant Actis.

The Washington State Investment Board approved about $550 million for a pair of private equity funds at its meeting last week, according to SIB spokeswoman Liz Mendizabal, putting WSIB’s approved commitments to the asset class at well over $2 billion on the year.

The $78 billion retirement system made a €222 million re-up to Apax Partners’ eighth fund, as well as a $250 million commitment to Actis Global IV. Actis, a new relationship for WSIB, was chosen because of its strong presence in emerging markets, Mendizabal said in an email.

Actis is targeting $3.5 billion for its latest vehicle, which includes regional funds for India, Africa, China and Latin America, according to documents from the Pennsylvania School Employees’ Retirement System. The fund will invest between $50 million and $300 million in 35 to 40 deals within the consumer, financial services, business services, industrial and energy sectors. Actis expects to invest approximately half the fund in Asia, with the remaining half to be invested in Africa and Latin America.

Actis Global IV's predecessor, a 2007 vintage, has generated a net 1.1x multiple and 9 percent internal rate of return as of 31 March, according to PSERS documents.

Apax is targeting €9 billion for its eighth European fund, according to reports. Apax Europe VII, which raised €11.2 billion in 2008, has generated a 7.32 percent IRR since inception, according to the California State Teachers’ Retirement System.

In addition to its commitments to Actis and Apax, Washington also purchased a secondary commitment to Southern Cross Latin American Fund IV. WSIB did not respond to requests for additional information about the purchase. The retirement system committed $100 million to the fourth fund last year.

Washington has been an active investor this year. At its September meeting, the board committed up to $425 million for Green Equity Fund VI and Endeavour Fund VI. The retirement system has committed at least $2.175 billion to private equity this year, according to documents, including commitments to TPG Growth Fund II, Providence Private Equity Partners VII, Kohlberg Kravis Roberts Fund XI and BC European Capital Partners IX.

Washington has nearly 20 percent of its assets, $15.6 billion, committed to private equity as of 30 September, according to its website. The retirement system launched its private equity program in 1981.